HK shares gain for 3rd day; China stocks at 1-yr high

Hong Kong stocks rose 1.8 percent in a third straight winning session on Friday, as investors continued to pile into property and bank stocks on signs the U.S. and China will keep to their easy monetary policies for some time.

Some of the buying was also triggered by short covering ahead of the expiration of index futures on Monday, brokers said.

China-listed stocks edged up 0.11 percent to a one-year closing high in mixed trading on Friday, as both liquidity and signs of economic recovery were positive but investors were more wary after steep gains.

"After cautious comments from the World Bank and other agencies this week, investors may have even less confidence in a recovery in developed economies. China and Hong Kong are still the places to invest in," said Philip Chan, head of research with CAF Securities.

Chinese bank stocks built on previous gains after the official China Securities Journal reported that new lending could reach 1.2 trillion yuan ($175.6 billion) in June, pushing the first-half total past 7 trillion yuan.

Top lender ICBC (601398.SS) rose 2 percent to 5.55 yuan in Shanghai, while Bank of Communications (3328.HK) advanced 3.8 percent to HK$8.42 in Hong Kong.

Late on Thursday, the central bank said it would stick to an appropriately easy monetary policy to support an economy that was heading in the right direction but was not yet on a solid footing. [ID:nLP512447]

COAL, SMALL BANKS GAIN IN HONG KONG

The benchmark Hang Seng Index .HSI was up 325.23 points at 18,600.26, gaining 3.8 percent on the week

The gauge, which has risen more than 29 percent since the beginning of the year, is trading at 16.7 times the estimated earnings of its blue-chip constituents in 2009.

"It's still true that the pick-up in economic activity is lagging the rally in the stock market, so instead of the W-shaped recovery that many expect to see, we might see an L-shape. The market may flatten out after a big correction in the second half," said Peter Lai, director with DBS Vickers. link....